Business Activities and Related Violations of Tbilisi City Council Members

04 December, 2019

Transparency International Georgia has found a number of violations in its evaluation of the business activities of all 50 members of the Tbilisi City Council. The research has revealed that 10 public officials have incompletely declared their business activities or that of their family members, 6 public officials have not transferred the management rights of their shares in private companies to another person, and one public official still holds the position of director in a private company. Transparency International Georgia urges the Civil Service Bureau to review the asset declarations of public officials in question and respond to violations in accordance with the law.

27 out of the 50 members of the Tbilisi City Council have the status of a public official. Unlike the other 23 members, public officials in the City Council have additional powers and receive their remuneration from the city budget. This is why they are not allowed to engage in entrepreneurial activities and are obliged to present an annual asset declaration in which they disclose their income and information about their property (including that of their family members).

Asset declarations are an important mechanism for thwarting corruption. It serves two primary purposes: 1) Revealing and preventing a possible conflict of interest in the public service; 2) Monitoring the assets of public officials for the purpose of preventing unlawful enrichment.

Worth noting is the fact that after the adoption of legislative amendments in 2019, the Deputy Chairpersons of Factions in the Tbilisi City Council are no longer obliged to fill in asset declarations, despite the fact that they are public officials and receive respective remuneration. Moreover, ordinary members of the City Council, who are not required by law to fill in asset declarations, regularly receive a fixed amount of money to cover their expenses. In order to identify and prevent conflict of interest, it is important for every member of the Tbilisi City Council to disclose information about their business interests.

Transparency International Georgia has analyzed the entrepreneurial activities of the members of the Tbilisi City Council and their family members based on their asset declarations and the information available on the database of the public registry. The research has found the following:

26 out of the 50 members of the Tbilisi City Council have business links, and 23 of them are members of the ruling Georgian Dream Party.

14 out of the 27 public officials in the Tbilisi City Council have business links. The family members of five of these public officials have business interests.

12 out of the 23 ordinary members of the Tbilisi City Council have business interests. 7 of them hold a management position in their own company in parallel to being a member of the Tbilisi City Council.

Obligation to file asset declarations in the Tbilisi City Council

Faction Deputy Chairpersons

The obligation to fill in asset declarations does not apply equally for all members of the Tbilisi City Council. Following the amendments to the Local Government Code in December 2017, the Deputy Chairperson of the City Council Faction is considered to be a public official. Nevertheless, according to the amendments made to the Law on Conflict of Interest and Corruption in Public Service in April 2019, the obligation to fill in an asset declaration and refrain from conflict of interest (such as transfer of management rights of shares) related to business activities no longer applies to Faction Deputy Chairpersons.

As a result of these changes, 7 Deputy Chairpersons of the Tbilisi City Council Factions are no longer required to fill in asset declarations, even though their work is equivalent by law to that of a public official, and for which they receive respective remuneration. Transparency International Georgia recommends for these individuals to have the obligation to fill in asset declarations, just as it would be the case with any other public official.

Ordinary Members of the Tbilisi City Council

The analysis of the public registry database has revealed that the ordinary members of the Tbilisi City Council are engaged in entrepreneurial activities. However, they are not obliged to disclose information in any manner. The Tbilisi City Council is not an exception in this case – the obligation to fill in asset declarations doesn’t apply to a significant part of municipal councils.

The obligation to fill in asset declarations doesn’t apply to the ordinary members of the Tbilisi City Council. Due to this, we are unable to tell whether the family members of the 23 ordinary members of the Tbilisi City Council are engaged in entrepreneurial activities and if there is a conflict of interest.

Transparency International Georgia is of the opinion that the public should be aware of the business interests of every person that was elected to the local representative body, regardless of his/her official status. This can be accomplished by introducing a simplified asset declaration form for the ordinary members of the City Council, which will focus on the business interests of the ordinary member and their family members (links to companies in the private sector). This will enable the prevention of conflict of interest on the level of the local government.

The necessity to introduce asset declarations for ordinary members of the City Council is further illustrated by the way these members are reimbursed for their expenses. The ordinary members of the City Council do not receive an official salary. However, Article 9 of the Rules of Procedure of the Tbilisi City Council provides a reimbursement threshold (maximum of GEL 3200 on a monthly basis (GEL 2500 till 2019) for the expenses related to the performance of specific tasks.

According to the official data requested from the Tbilisi City Council, the ordinary members of the City Council (with very rare exceptions) received a maximum fixed monthly allowance of GEL 2,500 during 2017-2018 and GEL 3,200 from 2019 (full database). In other words, the reimbursement of expenses is practically a salary.

In these circumstances, it is unclear why the obligation to fill in asset declarations applies only to the members of the City Council who receive salaries and not, for example, to the 12 ordinary members that have been identified by this research as engaging in entrepreneurial activities and at the same time receiving remuneration from the city budget.